Correlation Between IQ 500 and Nuveen ESG

Can any of the company-specific risk be diversified away by investing in both IQ 500 and Nuveen ESG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IQ 500 and Nuveen ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IQ 500 International and Nuveen ESG Large Cap, you can compare the effects of market volatilities on IQ 500 and Nuveen ESG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IQ 500 with a short position of Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ 500 and Nuveen ESG.

Diversification Opportunities for IQ 500 and Nuveen ESG

-0.59

Correlation Coefficient

IQ 500  Nuveen ESG

Excellent diversification

The 3 months correlation between IQIN and Nuveen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding IQ 500 International and Nuveen ESG Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Large and IQ 500 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IQ 500 International are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Large has no effect on the direction of IQ 500 i.e., IQ 500 and Nuveen ESG go up and down completely randomly.

Pair Corralation between IQ 500 and Nuveen ESG

Given the investment horizon of 90 days IQ 500 International is expected to under-perform the Nuveen ESG. In addition to that, IQ 500 is 1.15 times more volatile than Nuveen ESG Large Cap. It trades about -0.1 of its total potential returns per unit of risk. Nuveen ESG Large Cap is currently generating about 0.17 per unit of volatility. If you would invest  4,502  in Nuveen ESG Large Cap on September 12, 2024 and sell it today you would earn a total of  340.00  from holding Nuveen ESG Large Cap or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.69%
Values	Daily Returns

IQ 500 International  vs.  Nuveen ESG Large Cap

IQ 500 International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQ 500 International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, IQ 500 is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nuveen ESG Large

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Large Cap are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Nuveen ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IQ 500 and Nuveen ESG

The main advantage of trading using opposite IQ 500 and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ 500 position performs unexpectedly, Nuveen ESG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nuveen ESG will offset losses from the drop in Nuveen ESG's long position.

The idea behind IQ 500 International and Nuveen ESG Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.